Topic 1

DEFINITION OF CONSUMER BEHAVIOR

Introduction

Consumer behavior is the study of individuals, groups, or organizations and the processes they
use to select, secure, use and dispose of products, services, experiences or ideas. The knowledge
of consumer behavior is critical for influencing not only product purchase decisions but
decisions about which college to attend, which charities to support, how much recycling to do.

According to Louden and Bitta, ‘they see consumer behaviour as the decision process and
physical activity, which individuals engage in when evaluating, acquiring, using or disposing of
goods and services’. Marketers expect that by understanding what causes the consumers to buy
particular goods and services, they will be able to determine which products are needed in the
marketplace, which are obsolete, and how best to present the goods to the consumers.

Nature of Consumer Behaviour

Individuals develop self-concepts and subsequent lifestyles based on a variety of internal and
external influences. These self-concepts and lifestyles produce needs and desires, many of which
require consumption decisions to satisfy. As individuals encounter relevant situations, the
consumer decision process is activated. This process and the experiences and acquisitions it
produces in turn influence the consumers’ and lifestyle by affecting their internal and external
characteristics. Our view of ourselves and the way we try to live are determined by some internal
factors such as personality, values, emotions and external factors such as culture, age, and
friends. Below are the various factors that influence the consumer behavior:

1. Some factors are key determinant of consumer behavior.

a. Marketing factors such as product design, price, promotion, packaging, positioning and dis-
tribution.

b. Personal factors such as age, gender, education and income level.

c. Psychological factors such as buying motives, perception of the product and attitude towards
the product.

d. Situational factors such as physical surroundings at the time of purchase, social surroundings
and time factor.

e. Social factors such as social status, reference groups and family.

f. Cultural factors, such as religion and social class.

2. Consumer undergoes a constant change: Consumer behaviour is not static. It undergoes a

change over a period of time depending on the nature of products. For example, kids prefer
colourful and fancy footwear, but as they grow up as teenagers and young adults, they prefer
trendy footwear, and as middle-aged and senior citizens they prefer more sober footwear. The
change in buying behaviour may take place due to several other factors such as increase in
income level, education level and marketing factors.

3. Varies from consumer to consumer: All consumers do not behave in the same manner. The
differences in consumer behaviour are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technoholics. They go on a
shopping and spend beyond their means. They borrow money from friends, relatives, banks, and
at times even adopt unethical means to spend on shopping of advance technologies. But there are
other consumers who, despite having surplus money, do not go even for the regular purchases
and avoid use and purchase of advance technologies.

4. Varies from region to region and country to country: The behaviour of the urban consumers is
different from that of the rural consumers. A good number of rural consumers are conservative in
their buying behaviours. The rich rural consumers may think twice to spend on luxuries despite
having sufficient funds, whereas the urban consumers may even take bank loans to buy luxury
items such as cars and household appliances. The consumer behaviour may also varies across the
states, regions and countries. It may differ depending on the upbringing, lifestyles and level of
development.
5. Information on consumer behaviour is important to the marketers: Marketers need to have a
good knowledge of the consumer behavior which enables them to take appropriate marketing
decisions in respect of the following factors:

a. Product design/model

b. Pricing of the product

c. Promotion of the product

d. Packaging

e. Positioning

f. Place of distribution

6. Consumer behavior leads to purchase decision: Positive consumer behaviour leads to a

purchase decision. A consumer may take the decision of buying a product on the basis of
different buying motives. Therefore, marketers need to influence consumer behaviour to increase
their purchases.

7. Varies from product to product: Consumer behaviour is different for different products. There
are some consumers who may buy more quantity of certain items and very low or no quantity of
other items. For example, teenagers may spend heavily on products such as cell phones and
branded wears for snob appeal, but may not spend on general and academic reading. A middle-
aged person may spend less on clothing, but may invest money in savings, insurance schemes,
pension schemes, and so on.

8. Improves standard of living: The more a person buys goods and services, the higher is the
standard of living. But if a person spends less on goods and services, despite having a good
income, they deprive themselves of higher standard of living.

9. Reflects status: The consumer behaviour is not only influenced by the status of a consumer,
but it also reflects it. The consumers who own luxury cars, wrist watches and other items are
considered belonging to a higher status. The luxury items also give a sense of pride to the
owners.
Topic 2

MOTIVATION AND CONSUMER BEHAVIOUR

Why do people buy and consume the products, services and brands they do? This question is key
to consumer behavior. Motive is a critical factor that shapes consumption.

Motivation is an inner drive that reflects goal-directed arousal. In a consumer behavior context,
the result of this internal drive is a desire for a product, service, or experience. The motivated
consumer is aroused, ready, and willing to engage in an activity.

Classic Theories of Motivation

Freud’s Theory: Believes that the human psyche is broadly divided into the conscious and the
unconscious state. The ego represents that conscious mind. It is composed of perceptions,
thoughts, memories, and feelings. The ego gives the personality a sense of identity and
continuity. The unconscious: It includes all the instincts and psychic energies that exist at birth.
In this sense and it is biologically determined. The motivations derive from the unconscious
mind are both innate and unique to the individual. Some kinds of consumer behaviours are
driven by unconscious motives. Consumers often have difficulty articulating exactly why they
like something or why they have purchased something. For this reason, marketing researchers
often make use of techniques that facilitate an understanding of unconscious motives.

Maslow’s hierarchy Theory: The base pyramid represents the most dominant needs. Maslow’s
approach specifies that needs are arranged in a sequence from lower-level needs to higher-level
needs as depicted below:

Self-fulfillment (Self-actualization)

Prestige, status, self-respect (Ego)

Affection, Friendship (Social)

Protection, Order and Stability (Safety, Security)

Psychological (Food, Water, Air, Shelter, Sex)

Consumers must satisfy lower-level needs before they begin to pursue higher needs. The
highest level of need according to Maslow, is related to self-actualization. Consumers desire to
live up to their full potential. They want to maximize the use of their skills and abilities. The
need for self-actualization only becomes activated if all four of the lower-level needs have
already been satisfied. Maslow’s need hierarchy provides a useful summary or inventory of
human needs that may guide consumer behavior.

CROSS-CULTURAL EXAMINATION OF MOTIVES

The study of motivation centers on why people begin, stops, and persist in specific actions in
particular circumstances. Marketers are interested in this at different levels. For example, they
are interested in the basic needs for the acquisition of possession or the particular desire for a
type of product, but they are also interested in understanding and predicting why a particular
consumer in a specific social, cultural setting buys a special brand. Hence the need to discuss the
five types of motives as follows:

The Achievement Motive: It is seen as the need to experience emotion in connection with
evaluated performance. Individually oriented achievement motive implies striving for oneself
while the socially oriented achievement motive has the goal of meeting expectations of
significant others.

The Power Motive: It is defined as the need to have control or influence over another person,
group, or the world at large. There is a general conclusion that people who have a high need for
power strive to be confident. Although everyone may have some desire for control, confident
may not be the control strategy.

The Uniqueness/Novelty Motive: It is the need to perceive oneself as different from others.
Individuals the cultures express the desire to be independent and unique. Many cultures in
particular put a premium on standing out and being unique. The need for uniqueness is closely
related to self-esteem motives. Individuals with an independent view of self-seek to maintain
self-esteem by distinguishing and differentiating themselves from others.
The Affiliation Motive: It is defined as the motive to be with people. One of people’s most basic
social behavior is the urge for contact. The universality of the need to belong is revealed by the
use of banishment as a punishment in many societies. Research reveals that feelings of belonging
are strongly motivating.

The Self-Esteem Motive: It is seen as the ability to maintain a positive view of one’s self. Studies
show that some people take credit for successes, explain away failures, and see themselves as
better than most others in most ways. This is referred to as Self enhancing bias.

CONSUMER INVOLVEMENT

Motives need to be understood in terms of the effort that consumers are willing to commit. When
motivation to achieve a goal is high, consumers are likely to invest substantial effort.
Involvement can include heightened thinking and processing information about the goal, referred
to as cognitive involvement. Involvement can also include heightened feelings and emotional
energy, referred to as affective involvement.

Consumer involvement is a function of the goal, the individual, and the decision situation.
Therefore, a consumer’s involvement level varies with the person’s interpretation of a given
stimulus and according to his or her personal values or interest.

Topic 3

ROLE OF THE CONSUMER IN MARKETING

THE MEANING OF CONSUMER

In the fields of economics, marketing, and advertising, a consumer is generally defined as the
one who pays to consume the goods and services produced by a manufacturer/seller. A consumer
can be a person (or group of people), usually classified as an end user or target demographic for
a product, good, or service. In the absence of their active demand, the manufacturers would lack
a key enthusiasm to produce, which is to sell to consumers. Consumers may comprise of
individual or groups which include schools, families, clubs and any form of organizations,
purchasing units within organizations, and even government.

DIFFERENCES BETWEEN A CONSUMER AND A CUSTOMER

The importance of knowing the differences between a consumer and a customer is very critical
in deciding the marketing strategy for product or service. The terms "consumer" and "customer"
are frequently used interchangeably, but a consumer and customer are not always the same thing.
It must, therefore, be noted that the consumers use products while customers buy them. A
consumer may also be a customer and a customer can also be a consumer, but there are
circumstances where this varies.

Customer: The customer is the one who purchases a product or service. Simply put, it is the
consumer that buys the product or service; he pays for getting the product. A customer may or
may not use it for themselves. Take, for instance, a person buying milk is a customer, a retailer
buying milk for resale is a customer, and a company buying milk to serve its employee is a
customer.

Consumer: Consumer is the one who uses or consumes a product or service. It is not compulsory
that a consumer should purchase the product or service. In case of any other person buying the
product, which is consumed by another person, then the other person is the consumer and the
buyer is the customer. For example, a person drinking milk purchased by some other person is a
consumer. Consumers either buy or do not buy the products that they unavoidably use while
customers are people who buy goods and services, but may not use the merchandise themselves.
The consumer uses the product or service while Customers pay for the product or service.

TYPES OF CONSUMER

There are different types of goods and services that are normally offered for sale to consumers by
companies and manufacturers. A manufacturing company needs to understand the type of
consumers it is targeting with its goods in order to know that a market exists for the products
they are introducing to the consumers. This is also important because it enables the company to
appropriately present the product to the potential buyer, hence increasing the company’s sales
and profitability. The different types of consumers which are to be considered include:

1. Seasonal consumers: Many consumers buy and consumed products on a seasonal basis.
They shop at specific times when the need arise. Cash flow for a business selling seasonal
products can be very hard because long periods of the year may be without sales, so it is
vital to quickly and effectively target seasonal consumers. Examples of products that rely
 on seasonal consumers include: Umbrellas during the rainy season, in the hot season
there is demand for cold or icy drinks, in December there is increase purchase for
Christmas trees and decorations and in summer there is increasing demand for
Beachwear/Bikinis.
2. Personal consumers: These are individuals who purchase goods for personal, family or
household use. Manufacturers selling products to personal consumers are constantly
looking for ideas for upgrades and add-ons to enhance the appeal of their goods to
individuals and hence patronage, which will lead to profitability for the organization.
Examples include purchase of goods for personal use such as car, clothes, mobile phone
etc.
3. Organizational consumers: This category of consumers, purchase products for
organizations, governments or businesses. They buy in bulk and may place long-term
recurring orders for the product they want to purchase. The organizational consumers are
generally highly prized and sought after by companies. The products and services offered
to them are often expected to meet very strict standards or meet the specific requirements
of the buyer and negotiated at specific prices. The Manufacturers and service providers
who target these consumers are expected to be flexible in sale negotiation, but rigid in
maintaining product quality.
4. Impulse buyers: There are situations when consumers make unplanned buying decisions,
they are called Impulse buyers. They make swift decisions and immediately purchase the
products, due to some kind of emotional appeal which influences their action. The
consumers did not really have any initial plan to purchase, so product placement is very
important. Manufacturers who want to target impulse buyers will need their goods to be
featured prominently stores. The examples of impulse products are Chocolates, Cookies
and novelty items. The impulse buyers can be targeted by offering them significant
discounts or immediate service.
5. Need-based consumers: Need-based consumers buy goods and services when they are
needed and not at any other time. A need for a certain product normally makes consumers
buy it because it is needed immediately for a certain purpose. The marketers should
create a sense of need certain product, so be sold to consumers. Examples are Computer
accessories, paint, light bulb, air conditioning, life insurance etc.
 6. Discount driven consumers: They are the type of consumers who purchase goods and
services primarily for the discounts on offer. They may not engage in any buying activity
until discounts are been offered on products they like. Discount driven buyers are price
sensitive and would like to make a purchase when they are given discounts as opposed to
when they are sold for full price. Manufacturers, retailers and service providers may offer
discounts during the period of recession or harsh economic conditions to cushion the
effect it will have on consumers.
7. Habitual consumers: Habitual consumers are those who cannot do without using certain
brands or types of goods. The consumers, as a result of this, developed loyalty to that
brand. Marketers normally work hard to create brand loyalty amongst their consumers for
such products as body lotion, soda, automobile, clothes, cigarettes and even alcohol are
examples of products that may be targeted at habitual consumers.

Roles of consumer in marketing: They are three basic roles played by the consumer in
marketing:

Marketing research: The consumers play a major role in marketing research before a product or
service is released to the public. The company must first identify the target consumers, and invite
them to participate in a focus group discussion or send them a questionnaire on key elements of
marketing plan to be adopted for the company. This may involve questioning the consumers
about the right price to charge and what marketing message appeals to them, particularly when
releasing a new product or service to the market.

Product feedback: The consumer also plays a key role in the feedback-gathering process for a
company, when launching a new product to the market or assessing the product performance in
relation to other competitors. The company needs to evaluate results and continually monitor
consumer needs after the marketing plan has been implemented. For instance, software
developers get regular feedback from consumers in order to help them develop new and
improved versions of programs.

Bringing in new customer: Some consumers act as agents to further the effects of a firm’s
marketing plan to a prospective buyer. With word-of-mouth marketing, consumers who have
used a firm product can assist in referring other consumers to that product. This marketing
strategy is very effective because individuals tend to trust people they know when it comes to
trying new products and services.

Topic 3

CONSUMER SATISFACTION

Satisfaction can be described as a judgment of a pleasurable level of consumption related and

fulfillment. It also includes levels of under-fulfillment or over-fulfillment. Consumers can make
satisfaction judgments with respect to any or all of the aspects of product and service experience.
As a result, each aspect or stage becomes a potential point of differentiation for a market
offering. Satisfaction emerges across the service or product experience and even when
uncomfortable things happen, events may evolve in such a way as to make an overall satisfying
experience.

CAUSES OF SATISFACTION

The following have been stated as the identifiable causes of satisfaction by various scholars:

a. A positive change from an earlier perceived negative situation will give a consumer the
satisfaction desired.

b. Satisfaction takes place where the sense of achievement surpasses what is originally predicted
by the consumption of a good or services.

c. Satisfaction is tailor-made to the requirements of the consumer. Hence, the level of

satisfaction. e.g You got exactly what you ordered from a vendor.

RELATIONSHIP BETWEEN EMPLOYEE AND CUSTOMER SATISFACTION

Corporate slogans and mission statements sometimes link customer satisfaction to employee
satisfaction. The effect may be most pronounced in the service industry where satisfaction with
employees is vital to overall customer satisfaction. One implication is that the customer is not
always right and does not always behave in acceptable ways and a second implication is that
contact employees generally want to provide good service and are proud of their ability to do so.
CONSEQUENCES OF SATISFACTION AND DISSATISFACTION

In response to satisfying or dissatisfying purchase and consumption experiences, consumers may

opt to exercise one or more of four behavioural responses as follows: exit, voice, continued
patronage or twist.

Exit: A consumer will exit when there is a dissatisfying purchase and consumption experience.
At a minimum, the dissatisfied consumer may attempt to avoid that product or service, selecting
other alternatives whenever they are accessible and feasible. It should be noted however, that not
all decisions to exit are based on dissatisfaction, and not all dissatisfied consumers exit.

Voice: Voice can take several forms including compliments an organization may receive when it
delivers a satisfying outcome or complaints to the company about performance failure, negative
and positive word-of-mouth with other consumers. Consumers’ complaints and compliments to
firms provide valuable feedback.

Continued Patronage: Satisfaction is a relatively temporary post-purchase state that reflects how
the product or service has fulfilled its purpose. Customer loyalty is deeply held commitments to
re-patronize a preferred product or service consistently in the future, despite situational
influences and marketing efforts having the potential to cause switching behavior. Thus,
continued patronage includes both readiness to act (repeat purchase) and resistance to
alternatives.

Twist: Twist refers to positive and negative ways in which consumers restructure meanings,
roles, and objects in the marketplace. That is, the consumer reacts to consumer satisfaction or
dissatisfaction with novel behaviours anticipated by the organization. An example of a positive
twist is where loyal customers to a book store helped in the relocation of the store from one
location to another.
Topic 5

DETERMINANTS OF CONSUMER BEHAVIOR

The determinants of consumer behaviour can be grouped into three major captions namely,
economic, psychological and sociological. An attempt is made to elucidate these with least
complications.

I. Economic Determinants:

Economic scientists were the first among social scientists to study consumers and their behaviour
and provided the details about the solutions to the consumer and consumption problems.

The basic economic determinants are:

1. Personal income: One’s income is the reward for one’s economic efforts. Income means
purchasing power. When we talk of income in marketing sense, we are more concerned with
‘disposable income’ and “discretionary income’.

‘Disposable income’ is the amount of money that a consumer has at his disposal for spending or
saving or both. In other words, of the total gross income, whatever balance remains after meeting
preemptive demands like taxes, debt repayment and debt servicing charges and the like. Decline
in disposable income reduces the consumer spending; however, when disposable income rises,
consumer spending not only rises but makes them to go in for more of luxuries. On the other
hand, ‘discretionary income’ is the income which is available after meeting the basic needs of
living.

2. Family income: Where a consumer is the member of a joint family, the buyer behaviour is
influenced by the family income rather than the individual income. It does not mean that one can
ignore the individual income, for family income is the aggregate of individual income of all the
members of the family.
In a joint family, it may so happen that a rise in an individual member’s income may be
neutralised by a fall in another member’s income. That is why; it is the relationship between the
family size and the income finally determines the buying behaviour such family members.

3. Consumer income expectations: A times, it is the future income expectations of the consumer
that influences such consumer behaviour. It is the optimism or the pessimism about consumer
income that determines the level of current spending. If there are bleak prospects of future
expected income, he spends less now and saves more and vice versa.

4. Consumer liquid assets: Liquid assets are the assets held in the money or near-money forms of
investments. The best examples of this kind are hard cash, bank balance, bank deposits, shares
and bonds and saving certificates. These assets are built up to buy some consumer durables or to
meet unexpected future needs or contingencies.

5. Consumer credit: Consumer credit is a facility extended by a market to postpone the payment
of products bought to some future date. Consumer credit takes number of shapes like deferred
payment, installment purchasing, hire-purchase arrangements and the like. Easy availability of
consumer credit makes the consumer to go for those consumer durables which he would have
postponed.

6. The level of standard of living: The consumer behaviour has the impact of the established
standard of living to which consumer is accustomed to. Even if consumer income goes down, the
consumer spending will not come down immediately because it is very difficult to come down
from an established standard of living. On the other hand, rise in income tends to improve the
established standard of living. In case the income falls, the short-fall is made good by borrowings
to a certain extend over a short period of time.

II. Psychological Determinants:

The major psychological determinants internal to the individual are motivation, perception
learning, attitude and personality.

1. Motivation: “Motivation refers to the drives, urges, wishes or desires which initiate the
sequence of events known as behaviour.” Motivation is an active, strong driving force that exists
to reduce a state of tension and to protect, satisfy and enhance the individual and his self-
concept. It is one that leads the individual to act in a particular way. It is the complex net-work of
psychological and physiological mechanisms. Therefore, motives can be conscious or
unconscious, rational or emotional, positive or negative. These motives range from a mere
biological desires like hunger and thirst to the most advanced scientific pursuits like landing on
the Moon or Mars.

2. Perception: Perception is the process whereby stimuli are received and interpreted by the
individual and translated into a response. In other words, perception is the process by which the
mind receives, organizes and interprets physical stimuli. To perceive is to see, hear, touch, taste,
smell and sense internally something or some event or some relation. Perception is selective
because, and individual cannot possibly perceive all stimulus objects within his perceptional
field; hence, he perceives selectively.

3. Learning: Consumer behaviour is a process of learning because it is modified according to the

customer’s past experience and the objectives he or she has set. As most consumer behaviour is
learnt behaviour, it has deep impact on consumer buying process. Prior experience and learning
acts as buying guide. In-spite of such habitual behaviour, consumers’ still switch brand, try new
products.

4. Attitude: Attitude measurements help in understanding and prediction of consumer behaviour.

‘Attitude’ refers to a predisposition to behave in a particular way when presented with a given
stimulus and the attitudes towards people, places, products and things can be positive or negative
or favourable or unfavourable. Attitudes develop gradually as a result of experience from
interaction of a person with family, friends, and reference groups.

5. Personality: Personality consists of the mannerisms, habits and actions that make a person an
individual and thereby serve to make him distinct from everyone else. It is the function of innate
drives, learned motives and experience.

III. Sociological Determinants:

Sociologists and social psychologists have attempted to explain the behaviour of a group of
individuals, the way in which it affects individual’s behaviour in marketing or purchase
decisions.
These groups of individuals as determinants are:

(1) Family

(2) Reference groups

(3) Opinion leaders

(4) Social class and

(5) Caste and culture.

1. Family: Many decisions made by consumers are taken within the environment of the family
and are affected by the desires, attitudes, and values of the other family members. Family, as a
primary group of socialization, is vital because, it links the individual with a wider society and it
is through this that the individual learns the roles appropriate to the adult life. The family can be
‘nuclear’ or ‘extended’. A ‘nuclear’ family is a two generational family which consists, usually,
a mother-father and children. The ‘extended’ family is one that spans at-least three generations
which consists of mother-father- children-grandparents uncle-aunts, cousins-nephews and other
in-laws. There is another way of classifying the family based on family life-cycle.

The family impact on consumer buying behaviour can be traced in two ways:

The family influence on the individual personality characteristics, attitudes and the evaluative
criteria and

Family is both a purchasing and consuming unit. Therefore, it is essential to note the
distinguished family roles of the members.

2. Reference groups: Each person in the society is not only the member of his family but the
member of some group or groups outside the family circle. These groups can be called as
‘reference groups’. ‘Reference groups’ are those groups which an individual identifies with to
the extent that these groups become a standard or norm which influences his behaviour.

3. Opinion leaders: Like reference groups, ‘opinion leaders’ or ‘influentials’ play a key role in
influencing the buying behaviour of their followers. Very often we come across situations where
a person refers to an individual than a group in formulating his or her behaviour pattern. The
individual to whom such reference is made by a person or persons is the opinion leader.

The beliefs, preferences, attitudes, actions and behaviour of the leader set a trend and a pattern
for others to follow in given situation. In very intimate reference group, there is a reference
person, an informal group leader.

4. Social class: Buying behaviour of individuals is also influenced by the social class they
belong. Social class is a relatively permanent and homogeneous division of a society into which
individuals or families sharing similar values, life-style, interests and can be categorized. Social
class is a larger group than intimate group in structure. Constitution of a social class is
determined by the income, authority, power, ownership, lifestyles, education, consumption
patterns, occupation, type and place of residence of the individual members. In our country, we
can think of three classes are as ‘rich’, ‘middle’ and ‘poor’.

5. Culture: ‘Culture” refers to all those symbols, anti-factor and behavioural patterns which are
passed on socially from one generation to the next. It includes cognitive elements, beliefs,
values, and norms, signs and non-normative behaviour. Cultural trends have significant
implications for market segmentation, product development, advertising, merchandising,
branding and packaging. While designing the marketing-mix, it is but essential to determine the
broad cultural values that are relevant to the product as well as the most effective means of
conveying these values.

Topic 6

PROBLEM RECOGNITION PROCESS

Hawkins et al., (2004) defined problem recognition as “the result of a discrepancy between a
desired state and an actual state that is sufficient to arouse and activate the decision process”.
They explained “an actual state” as” the way an individual sees his or her feelings and
circumstance at a point in time”. On the other hand, “a desired state” is “the way an individual
would like to feel or be at a present time”. Hence, the difference between a consumer’s desired
state and actual state is what could be regarded as the recognition of a problem arising. Problem
recognition is the first step in the consumer decision- making process. It is caused by a difference
between the consumer’s ideal state and actual state. Therefore, it is when we experience a
significant difference between our current state of affairs and some state we desire. We realize
that to get from here to there, we need to solve a problem, which may be small or large, simple
or complex. A person who unexpectedly runs out of petrol on the highway has a problem and so
does the person who becomes dissatisfied with the image of his car even though there is nothing
wrong with the car mechanically. There are various causes of problem recognition and these
include:

 Out of stock

 Dissatisfaction

 New needs/wants

 Related products/purchases

 New products

THE NATURE OF PROBLEM RECOGNITION

It is worthy to note that the consumer’s perception plays a key role in problem recognition.
Consumer’s way of life and current condition may shape what an individual regards as a problem
or otherwise. For instance, consumers of cigarettes who think it is not harmful because they do
not inhale the smoke are not facing the reality that smoking is harmful to their health.
Conclusively, problem recognition may not end up in purchase. That is, the fact that a consumer
identifies a need does not mean the individual is willing to resolve the problem at that point in
time. This could be as a result of:

a. Delay in purchase which may be due to financial or time constraints or both: A consumer who
wants to buy a very good leather shoe but finds out that he or she does not have enough money to
purchase (financial constraint) or does not have enough time to go round the shoe shops for the
quality of shoe desired (time constraint).
b. Lack of satisfactory options to solve the problem: Where a customer is not able to get a pair of
shoe of a particular colour or size for instance, it could lead to lack of purchase due to a
(unsatisfactory options).

c. An individual’s unwillingness in solving the problem: A consumer might not make a purchase
if the problem recognized is not taken as a priority or immediate need.

TYPES OF CONSUMER PROBLEMS

Consumer problems can be active or inactive as identified by Hawkins et al., (2004).

Active Problems: Are problems that are already known to the consumer or which the consumer
will be aware of in the normal cause of action. In essence, the consumer only needs to be
convinced about the superiority of one brand over another in satisfying this need.

Inactive Problem: Are problems which are unknown to the consumer. In contrast, this type of
problem requires the consumer to be convinced by the seller that there is a problem in the first
instance and that the brand being introduced is the most suitable to solve the problem. E.g a
consumer using detergent to remove tough stains from cloth, such consumer would be convinced
to use bleach instead.

UNCONTROLLABLE DETERMINANTS OF PROBLEM RECOGNITION

Differences between what a customer aspires for and his current state creates a situation for
problem recognition. These differences could be due to various factors which affect the wants of
the consumer at a particular time. These factors cannot be controlled by the marketing personnel
in spite of being noticeable and rational. A typical example is;

Culture of the consumer: The custom and differences in behavior, for instance, plays an
important role in the choices that will be made between a Nigerian and an American consumer.

Age: This could have a considerate impact on what a consumer regards as a desire which needs
satisfaction.

Social class: The class the consumer belongs to too is a major determinant. You can’t sell a Benz
to a lower class citizen
MARKETING STRATEGY AND PROBLEM RECOGNITION:

There are four key strategies for a marketing manager to adopt in regards to problem
recognition. These are as follows:

I. Discovering Consumer Problems: This approach refers to the use of surveys or focus groups
in identifying problems. These could be achieved through one of the following types of analysis:

a. Activity analysis: This focuses on the problems consumers face during the performance of a
particular activity.

b. Product analysis: This analysis targets the frequency in purchase of a particular product or
brand name.

c. Problem analysis: this method involves asking questions from consumers about what product,
brand or activity could be linked to problems listed.

II. Responding to Consumer Problems: After problem recognition, the firm tries to provide a
solution by aligning their activity or product in tune with consumers’ needs.

III. Assisting Consumers Recognize Problems: This could be achieved identifying a problem
that a diverse range of products can solve Selective problem or identifying a problem that only
one brand can solve.

IV. Suppressing Problem Recognition: A means by which firms play down the problem
recognition generated by their competitors, consumer groups or government agencies. A good
example is an advert by a cigarette manufacturer portraying smoking as not injurious to health,
despite contrary adverts by government agencies.
Topic 7

TYPES OF CONSUMER BUYING BEHAVIOR

1. Complex buying behavior: This type of behavior is encountered when consumers are buying
an expensive, occasionally bought product. They are highly involved in the purchase process and
consumers’ research before committing to a high-value investment. E.g buying a house or a car.

2. Dissonance-reducing buying behavior: The consumer is highly involved in the purchase

process but has difficulties determining the differences between brands. ‘Dissonance’ can occur
when the consumer worries that they will regret their choice.

3. Habitual buying behavior: Habitual purchases are characterized by the fact that the consumer
has very little involvement in the product or brand category. Imagine grocery shopping: you go
to the store and buy your preferred type of bread. You are exhibiting a habitual pattern, not
strong brand loyalty.

4. Variety seeking buying behavior: In this situation, a consumer purchases a different product
not because they weren’t satisfied with the previous one, but because they seek variety. E.g
When you are trying another type of deodorant or perfume.

FACTORS THAT AFFECTS CONSUMER BEHAVIOR

Many things can affect consumer behavior, but the most frequent factors influencing consumer
behavior are:

1. Marketing campaigns: Marketing campaigns influence purchasing decisions a lot. If done right
and regularly, with the right marketing message, they can even persuade consumers to change
brands or opt for more expensive alternatives. Marketing campaigns can even be used as
reminders for products/services that need to be bought regularly but are not necessarily on
customers’ mind (like an insurance for example).

2. Economic conditions: For expensive products especially (like houses or cars), economic
conditions play a big part. A positive economic environment is known to make consumers more
confident and willing to indulge in purchases irrespective of their financial liabilities. The
consumer’s decision-making process is longer for expensive purchases and it can be influenced
by more personal factors at the same time.

3. Personal preferences: Consumer behavior can also be influenced by personal factors: likes,
dislikes, priorities, morals, and values. In industries like fashion or food, personal opinions are
especially powerful. E.g If you are a vegan, it does not matter how they advertise KFC Chicken,
you would never eat it.

4. Group influence: Peer pressure also influences consumer behavior. What our family members,
classmates, immediate relatives, neighbors, and acquaintances think or do can play a significant
role in our decisions.

5. Purchasing power: Our purchasing power plays a significant role in influencing our behavior.
Unless you are a billionaire, you will consider your budget before making a purchase decision.
The product might be excellent, the marketing could be on point, but if you don’t have the
money for it, you won’t buy it.

CUSTOMER BEHAVIOR PATTERNS

Buying behavior patterns are not synonymous with buying habits. Habits are developed as
tendencies towards an action and they become spontaneous over time, while patterns show a
predictable mental design. Customer behavior patterns can be grouped into:

1. Place of purchase: Most of the time, customers will divide their purchases between several
stores even if all items are available in the same store. Think of your favorite supermarket:
although you can find clothes and shoes there as well, you’re probably buying those from actual
clothing brands. Studying customer behavior in terms of choice of place will help marketers
identify key store locations.

2. Time and frequency of purchase: Customers will go shopping according to their feasibility and
will expect service even during the oddest hours; especially now in the era of e-commerce where
everything is only a few clicks away. It’s the shop’s responsibility to meet these demands by
identifying a purchase pattern and match its service according to the time and frequency of
purchases. One thing to keep in mind: seasonal variations and regional differences must also be
accounted for.
3. Method of purchase: A customer can either walk into a store and buy an item right then and
there or order online and pay online via credit card or on delivery. The way a customer chooses
to purchase an item also says a lot about the type of customer he/she is. Gathering information
about their behavior patterns helps you identify new ways to make customers buy again.

Topic 8

CONSUMERISM

Consumerism is the organized form of efforts from different individuals, groups, governments
and various related organizations which helps to protect the consumer from unfair practices and
to safeguard their rights. Consumer is regarded as the king in modern marketing. In a market
economy, the concept of consumer is given the highest priority, and every effort is made to
encourage consumer satisfaction.

However, there might be instances where consumers are generally ignored and sometimes they
are being exploited as well. Therefore, consumers come together for protecting their individual
interests. It is a peaceful and democratic movement for self-protection against their exploitation.
Consumer movement is also referred as consumerism. The growth of consumerism has led to
many organizations improving their services to the customer.

Consumerism is a protest of consumers against unfair business practices and business industries.
It aims to eliminate those unfair marketing practices e.g. misbranding, spurious products, unsafe
products, adulteration, fictitious pricing, planned obsolescence, deceptive packaging, false and
misleading advertisements, defective warranties, hoarding, profiteering, black-marketing, short
weights and measures etc.

FEATURES OF CONSUMERISM

Highlighted here are some of the notable features of consumerism:

Protection of Rights − Consumerism helps in building business communities and institutions to

protect their rights from unfair practices.
Prevention of Malpractices − Consumerism prevents unfair practices within the business
community, such as hoarding, adulteration, black marketing, exploiting, etc.

Unity among Consumers − Consumerism aims at creating knowledge and harmony among
consumers and to take group measures on issues like consumer laws, supply of information
about marketing malpractices, misleading and restrictive trade practices.

Enforcing Consumer Rights − Consumerism aims at applying the four basic rights of consumers
which are Right to Safety, Right to be Informed, Right to Choose, and Right to Redress.

They are two driving forces of consumerism advertising and technology

The first driving force of consumerism is advertising: Here, it is connected with the ideas and
thoughts through which the product is made and the consumer buys the product. Through
advertising, we get the necessary information about the product we have to buy.

Technology is upgrading very fast: It is necessary to check the environment on a daily basis as
the environment is dynamic in nature. Product should be manufactured using new technology to
satisfy the consumers. Old and outdated technology won’t help product manufacturers to sustain
their business in the long run.

CONSUMERISM CHALLENGES

 It is assumed that consumers know their needs.

 It is assumed that business really cares about those needs and knows exactly how to find
about them.
 It is assumed that business does provide useful information that precisely matches
product to needs.
 It is presumed that product and services really fulfill customer expectations as well as
business promises.
CONSUMERISM COVERS CONSUMER DISSATISFACTION

(i) Removal or reduction of discontent and dissatisfaction generated in the exchange

relationships between buyers and sellers in the market.

(ii) Consumerism has interest in protecting consumers from any organization with which there is
an exchange relationship.

(iii) Modern consumerism also takes keen interests in environmental matters affecting the quality
of life.

Topic 10

CONSUMER PROTECTION

Consumer protection is the practice of safeguarding buyers of goods and services, and the public,
against unfair practices in the marketplace. Consumer protection measures are often established
by [law]. Such laws are intended to prevent businesses from engaging in fraud or specified unfair
practices in order to gain an advantage over competitors or to mislead consumers. They may also
provide additional protection for the general public which may be impacted by a product (or its
production) even when they are not the direct purchaser or consumer of that product.

The Federal Competition and Consumer Protection Act, 2019 ("FCCP Act" which was enacted
recently has provisions on the right of a consumer.

Rights of a Consumer:

i. Right to be given information in plain and understandable language: A consumer is

entitled to be given information in plain and understandable language where such is
required to be given by an undertaking ("this includes a seller, supplier, distributor,
importer and a manufacturer"). The test of whether information is in plain and
understandable language is the reasonable man's test of the standard of persons which the
information is disseminated to.
ii. Right of disclosure of prices of goods and services: The prices of all goods and services
must be displayed clearly so a consumer can take notice of it. An undertaking must also
not require a consumer to pay a price higher than that displayed for the good or service.
 iii. Right to adequate trade description and to have products labeled: A trade description is
any description, statement or indication as to the number, quantity, and quality i.e. of
goods. An undertaking is mandated to ensure that trade descriptions are applied to goods
either directly, in close proximity or by any commercial communication and that they are
labelled appropriately for the benefit of a consumer. An undertaking shall not supply a
trade description which is misleading or likely to mislead a consumer or which is false.
iv. Right to disclosure of second-hand or reconditioned good: Any person who offers to sell
goods that are second hand or have been reconditioned, rebuilt or remade must clearly
notify the consumer of the nature of the goods.
v. Right to be given adequate information of every transaction: A consumer must be
provided with a written record of every transaction by the undertaking. This record
should contain the business details of the undertaking, the full details of transaction, tax
payable etc.
vi. Right not be given a condition before making a purchase: A consumer must not be given
a condition to fulfill first before entering into any transaction with the undertaking or a
third party for the supply of goods and services.
vii. Right to cancel advance reservation, booking or order: The consumer reserves the right to
cancel advance reservation, booking or order for goods and services. The supplier or
service provider may require the consumer to pay a fee upon cancellation but such fee
must be fair and not excessive, taking the transaction into consideration.
viii. Right to reject goods before completing the transaction: A consumer has the right to
reject goods displayed in open stock before completion of the transaction.
ix. Right to goods corresponding with samples and descriptions: Where a consumer cannot
examine goods offered by a supplier and the consumer relies on the samples and
description offered by the Supplier. Upon delivery of the goods, they must correspond in
all material aspects with the sample and description offered by the supplier. This is
especially relevant to e-commerce and internet marketing, goods displayed by vendors
must correspond with the goods supplied to the consumer.
x. Right to reject goods: A consumer has the right to reject goods in the following instances:
a) Where the goods are intended to satisfy a particular purpose which is communicated to
the supplier and upon delivery, the goods are not fit for that purpose.
 b) Where the consumer did not have the opportunity of examining the goods before
purchase for example e-commerce and upon delivery the goods do not match the sample
and/or description or they do not meet up to the quality and type envisaged in the sales
agreement.
c) Where the goods are defective and unsafe.
d) Where a consumer returns goods in any of these circumstances the consumer is entitled to
a full refund of money paid for the goods.
xi. Misleading, false, fraudulent and deceptive information: No producer, importer,
distributor, retailer or service provider shall in pursuance of trade or for the purpose of
marketing goods or services to a consumer make any representation which is misleading,
erroneous, fraudulent and deceptive. Such a person shall also not use physical force,
coercion, undue influence, pressure, harassment etc. to get a consumer to enter into a
transaction for goods and services with him or take undue advantage of consumers with
physical, mental or educational disabilities. Any undertaking that violates these rights of
a consumer will be liable to the consumer for damages and restitution.
xii. Right against unfair prices and terms: An undertaking shall not supply, offer to supply,
market or negotiate goods and services to consumers in a manner and/or for prices that
are unfair, unreasonable and unjust. The undertaking shall also not require waiving the
consumer's rights or the consumer assuming the liability of the undertaking or assuming
any obligation in a manner that is unfair or unjust.
xiii. Notices detrimental to consumers: Any notice which seeks to limit in any way the risk or
liabilities of a supplier of goods or services, constitute an assumption of risk by the
consumer, impose an obligation on the consumer to indemnify the supplier or is an
acknowledgment of fact by the consumer must be brought to the attention of the
consumer in a conspicuous manner and form that a reasonable man won't miss such a
notice and the consumer must be given adequate opportunity to receive and comprehend
the notice.
xiv. Right to quality service: A consumer who enters into any transaction for the performance
of services has a right to timely performance, quality performance and completion of the
service. The consumer also has a right to the use, delivery or installation of goods that
free from defects for the performance of the service. If there will be any delay in the
 performance of the service then the consumer must be given timely notice. Failure of a
provider of a service(s) to adhere to these rights of the consumer, the consumer will be
entitled to have the defects remedied and a refund of a reasonable portion of the price
paid for the service having regards of the extent of the failure.
xv. Right to safe and quality goods: Every consumer has the right to receive goods that are
suitable for the purpose which they are generally intended, be of good quality, free from
defects. The goods must also be useable and durable for a reasonable period of time and
comply with any applicable standards set by industry sector regulators. There is an
implied warranty that all goods and services must comply with these requirements.

ENFORCEMENTS OF CONSUMER RIGHTS

A consumer whose rights have been violated by any person can either refer the matter to the
undertaking for redress or file a complaint in the Federal Competition and Consumer Protection
Commission ("the Commission"). The Consumer also has the option of seeking redress in a
Court of competent jurisdiction. The Commission has the power to investigate complaints and
issuing appropriate orders.